Historical Rent to Price Ratio: 5%

NEW -> Contingent Buyer Assistance Program
<p>Why thanks, no vas.</p>

<p>One warning: make your you can do your race car thing whereever you buy, and the HOA will not mind. Some HOAs in Fla will drive your crazy, and some will just turn a blind eye.</p>

<p>In Fla, anyhow, and I see no reason for it to be different there, many, many HOAs have specific prohibitions against doing any but the most basic of auto repairs. A lot of them have verbiage to the effect that you can, say, change your oil, and do necessary repairs if your car breaks down in the driveway. They say, no visible cars on blocks, no inoperable cars sitting forever outside, which I assume you don't intend to do anyway. </p>

<p>But you might want to think about what happens if you want to open your 3 car garage doors on a pleasant day, while messing with your race car, which just might be up on blocks inside the garage, and have some nosy parker raise hell about your violation of the rules and regs. In addition to reading the rules and regs, I'd want to talk to the pres of the HOA.</p>

<p>I think that perhaps the drumbeat and intensification of negative news, even tho expected and planned for by IR and Graphrix, maybe getting to those worthies, since they have their fingers to the pulse, even more than the rest of us.</p>

<p>My broker buddy who is selling cruises says one of the biggest benefits of leaving the real estate biz, was being around positive people, and not having to hear all the awful stories every day, and having perfectly good loans sitting on his desk that he couldn't place. He is successful so far, and I hope that the cruise biz doesn't go down the crapper for a while at least. Altho, truth be told, I think it will, after all the credit cards are maxed out. Anyway the psychological relief was great after he left. </p>

<p>I certainly mean no insult to IR and Graph.</p>
 
<p>Last time I moved in 2006, it was 380 or higher anywhere I looked. I looked at a house in Coto about three months ago to rent and it was STILL 380.</p>
 
Without aruging about the GRM rate, how do you determine the "right rent' amount in area that with large homes (3000 sq ft), and very few lease transactions?? I have seen lease vary by up to 20 to 25% in the same area.
 
<p>Liz:</p>

<p>That won't be a problem. If it has an:</p>

<p>-HOA</p>

<p>-Pool or spa or hot tub</p>

<p>-Second Story</p>

<p>-Mello Roos</p>

<p>-Sidewalks</p>

<p>It's a non starter. Not even interested. Do not want.</p>

<p>There is a county island in between Orange/Tustin/Irvine/Santa Ana that my wife and I are planning to move to. Large (by OC standards) lots, lots of early 1960's single story ranch homes that haven't been subjected to multiple remodels, sherrif instead of city cops. Anyway, I'm not Joe Dirt - all my toys stay inside so I can keep them torn apart out of the elements and the prying eyes of the neighbors. Which is why I want this neighborhood. Nobody there will care.</p>
 
"I looked at a house in Coto about three months ago to rent and it was STILL 380."





Well, I don't live in Coto, I live in North Orange County.





"There is a county island in between Orange/Tustin/Irvine/Santa Ana that my wife and I are planning to move to. Large (by OC standards) lots, lots of early 1960's single story ranch homes that haven't been subjected to multiple remodels, sherrif instead of city cops."





You mean "north Tustin", don't you? We've looked there also, on the hills. Larger lots, yes. Some areas are a bit isolated. We will also be looking there in addition to Irvine in the upcoming months.
 
Calculating the inflation hedge based on 30 years of rent misses most of the benefit of the hedge. The main benefit there is that the property is much more valuable in 30 years because at that point rents have more than doubled. An easier way to get at the value of owning during inflation is to treat the loan balance as declining every year due to inflation. So with mortgages at 6% and inflation at 2.5% you're really paying only 3.5%.
 
<em>"The main benefit there is that the property is much more valuable in 30 years because at that point rents have more than doubled"</em>





That is true in nominal dollars, but in inflation adjusted dollars, the property hasn't increased in value much at all, unless of course prices are bid up in another speculative bubble.
 
"how do you determine the "right rent' amount"



Um, like any other free market system? If the landlord and tenant agree to a rental price, its the "right rent"?



Not sure what your question is about here. If its really, "how do I get a good deal?", that's a different question.
 
"I looked at a house in Coto about three months ago to rent and it was STILL 380."





In Irvine, GRM is now at around 340. And I don't live in Irvine, or Coto, so we never peaked at those insane prices. :D
 
">The main benefit there is that the property is much more valuable in 30 years because at that point rents have more than doubled"



That is true in nominal dollars, but in inflation adjusted dollars, the property hasn't increased in value much at all, unless of course prices are bid up in another speculative bubble."



You can either consider inflation-adjusted dollars, in which the loan value is being cut by inflation, or nominal dollars, where the house price increases. Either way you get a large benefit to owning.
 
"What do you consider a large lot, no vas? Just curious."



Depends on what state you are in.



In So Cal, any lot that gives your house at least 12 feet from your neighbor's house and room for a 15'x15' ft backyard be marketed as a large lot.



In Texas, I think that's it's least 15 acres, you have to be able to roam at least 6 horses with room for your 20 tree pecan or apple orchard.
 
"open your 3 car garage doors on a pleasant day, while messing with your race car"



My buddies w race cars in CA don't work on them at home. They let Louie in Santa Ana mess with them. You really can't have the tools you need at home to mess with a race car.



One of my buddies w a race car has it because it's 1/3 the cost of a plane! and his wife wouldn't let buy the plane (he made his money in Microsoft earlly on). Another one with a race car says it's cheaper than a psychatrist. Me, I just golf.
 
<p>When I bought a townhome in Eastside Costa Mesa in 1999, the rent was $1450. I paid $170,000. I know because I looked at renting a more beat up same floor plan at $1450 in the complex and instead chose to buy one of the two for sale at $170,000.</p>

<p>The bottom was 3 years before I bought. The market was already recovering. The GRM was just under 120.</p>

<p>Knash your teeth all you want looking for statiscal hand waving to make GRMs look good, they are not. Annual GRM multipliers for properties as a investor have a well established baseline in the 8-12x range. Pick up almost any property investment book written prior to the 2002-2006 bubble and you wil see clearly how uniform that concept is. The low cost of renting money moves it a bit, but that will be ending too.</p>

<p> </p>
 
<p><em>"What do you consider a large lot, no vas? Just curious."</em></p>

<p>10,000 feet +. </p>

<p><em>"My buddies w race cars in CA don't work on them at home. They let Louie in Santa Ana mess with them. You really can't have the tools you need at home to mess with a race car."</em></p>

<p>You can't? I do! My race car is a hobby. Half the fun is working on it. I'm not paying somebody for the privlidge of having half my fun. And I've had Louie for a customer, he's fine for changing the water pump on my Taurus, but I'm not letting him near my race car......


</p>

<p>"<em>You mean "north Tustin", don't you? We've looked there also, on the hills. Larger lots, yes. Some areas are a bit isolated."</em><em>


</em><em></em></p>

<p>Yes, that's exactly the neighborhood. I didn't refer to it by name because I'm also willing to look at Lemon Heights and Cowan Heights. IMO the isolation isn't that bad, my wife cuts through it from Orange to Irvine every day.</p>
 
"I didn't refer to it by name because I'm also willing to look at Lemon Heights and Cowan Heights."



Yeah, all of those can be lumped into north tustin, as there really is no official "there" there. Those are nice areas, especially Lemon Heights, where many of the hill homes have spectacular views. These areas are definitely being considered by me and my wife, as well.
 
<em>"When I bought a townhome in Eastside Costa Mesa in 1999, the rent was $1450. I paid $170,000. "</em>





And I remember in 1998 my father's landlord offering the Anaheim condo he was renting for $175,000. His rent at the time: $1300.





past ≈ future





If we were seeing GRMs in the low 100s around the last bottom, I don't see any good reason to think that we won't at the next bottom. Yes there will be some adjustment for interest rates, but probably not that much.
 
I am a totally unmechanical female type person, but I don't see what the fun is, if you hire somebody else to mess around with it. I would think the fun was playing around with the innards yourself. You might want to hire a helper from time to time. But having someone else do it, is like having someone else swing your golf club. Or, in my case, plant all the plants and do all the weeding.
 
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